Using KPIs to Take Your Business to New Heights
Every day, every business generates terabytes of data — from installed business processes and systems to online apps and sites. Website cookies track all kinds of behavior, and data centers are being built everywhere to store all this information. And while we often hear about the downsides of so much data collection, especially with regard to the ongoing struggle to protect individual privacy, there are some upsides. With all this data comes an incredible opportunity to better understand the behavior of people, including current and potential customers. That information, when properly compiled and thoughtfully analyzed, can be used to grow a business like Jane’s. This is where KPIs come in.
What is a KPI?
A key performance indicator, or KPI, is a type of performance measurement that can be used to evaluate the success of an organization or of a particular activity in which it engages — such as projects, programs, products or other initiatives. Simply put, a KPI is a number — a quantitative indicator of a specific activity or function. Often, a single business or business unit will analyze a number of KPIs, collected into dashboards that organize the data into useful charts, graphs and visualizations, on a regular basis. How frequently they analyze the numbers can range from daily or weekly to monthly, quarterly or annually.
KPIs aren’t just numbers, though. They’re windows into the deeper anatomy and physiology of your business. They help you measure the effectiveness of what you are doing to reach your business’s goals. They can tell you whether you are making progress and, if so, how fast. They can help you decide if you should be doing more or less of something or trying something altogether different.
The Big Picture Approach to KPIs
It’s important to remember that KPIs are just another form of communication, as pointed out by Klipfolio, a provider of KPI visualization tools. As such, all the same best practices apply. Keep your KPIs simple, straightforward and easy to understand.
Begin by figuring out which KPIs are important for your organization. The best place to start is with your goals. What business goals are you trying to achieve? What metrics would help you best measure progress toward those goals?
In defining your KPIs, get input from managers, department heads and colleagues. Understand what data is available to you and what metrics you can calculate from it. Think critically and make decisions about which KPIs will actually give you valuable information. In our culture, it’s easy to forget that more is not always better. Don’t waste your time collecting and sifting through irrelevant data. Only measure and track what is worthwhile.
Be clear about who is responsible for compiling, reporting and analyzing your KPIs. And once you have them, be sure to routinely share them around among key team members.
KPIs exist for all aspects of business, including finance, production, sales, etc., but in this article, we’re focusing on the KPIs most relevant to communications and marketing. We take a look at common KPIs used by such professionals across all industries.
We’re not saying that you should measure each one of these KPIs. Instead, look through the list and figure out which would be most useful as you strive toward your business’s goals. Pick a few and then commit to being consistent in analyzing them on a regular basis so that you and your team can identify trends as they happen and make better decisions going forward.
Email Marketing KPIs
Every day, our inboxes are flooded with marketing emails. If you buy something from a company online, there’s a pretty good chance that they are going to keep emailing you long after you have received their product or used their service. The following KPIs can be relevant no matter what email marketing platform you use. They’ll help you to measure the effectiveness of your email marketing campaigns.
- Total number of recipients: How many people receive your email campaigns?
- Open rates: How many people actually open your emails?
- Click through rates: How many people click through to links in your emails?
- Forwards: How many times do people forward your email campaigns?
- Unsubscribes: How many people unsubscribe every time you send out an email campaign?
- Subscribes: How many people subscribe to your email campaigns voluntarily, and through which channels do they do so?
Website & Blog KPIs
Thanks to Google Analytics, you no longer have an excuse to say you don’t know what’s happening with your website. Google’s free tool gives you great insights into the performance of your websites and blogs. If anything, Google gives you too much data, so we suggest focusing on some subset of the KPIs below to keep yourself from going down the rabbit hole of website data.
- Unique visitors: How many different people visit your site per day, month or year?
- Bounce rate: How many people land on your website and immediately leave vs. how many stick around and browse for a bit?
- Length of visit: How long do visitors stay on your site?
- Pages visited: Which pages get the most traffic, and how many pages do they visit while there?
- Geographic reach: Where in the country or world are your site visitors located?
- Referral traffic: From which sites did your visitors come? If they came in via a search engine like Google, did they land there via organic or paid search results?
- Page load time: People are impatient and easily distracted. How fast does your site load each page?
- Mobile vs. Desktop traffic: What percentage of visitors are looking your site from a mobile device vs. a desktop computer? What’s your site’s current mobile friendliness score?
Digital Marketing & Advertising KPIs
We could write volumes on KPIs for marketing and advertising, and it’s easy to get overwhelmed with all the possible relevant data you can collect, so below are a few of the most useful indicators, especially for digital marketing.
- SEO: What keywords are bringing people to your site and how much traffic do they generate? Consider both paid and organic traffic.
- Number of keywords per page: How many keywords are on each page of your site?
- Cost per lead: How much does it cost you for digital advertising to get each visitor to your site?
- Conversion rate: What percentage of visits to your site — those you paid for and those you didn’t — turn into a new lead or even lead to a purchase (a.k.a., a conversion)?
- Customer acquisition cost: How much does it cost to get a customer to purchase on your site? This number will drop 1) as you get more organic search traffic such that you’re paying for less of the total traffic; and 2) as your conversion rate improves such that you will need fewer total leads to get the same amount of sales. You can look at this KPI for both new and returning customers. It often costs less to get a former customer to return than to convince a new one to come to your site.
- Customer spend per transaction: How much does each customer spend on your site per order?
- Customer retention: Of visitors who purchase on your site, how many customers are returning vs. new?
- Customer lifetime value: How much can you expect to make on average from each customer during the entire time they have a relationship with you? This one helps you evaluate repeat business and decide how much it is worth it to spend to bring in new customers that will then become repeat customers.
- Landing page conversion: Which landing pages are most effective in converting customers and thus generating sales?
Social Media KPIs
Social media marketing is like a sponge that will suck up as much time as you can give it. Most major platforms, like Instagram, Facebook and Twitter, have built-in analytics tools that help you mine key KPIs to evaluate your efforts. Social platforms such as Hootsuite also provide a number of analytics. Here are some of the most useful ones:
- Total followers: How many followers do you have on Facebook, Instagram or Twitter?
- Engagement: How many interactions per post or during a specific period of time? This can be broken down further into number of likes or follows per post or number of comments per post.
- Shares: How many shares per post?
- Click-thru rate: How many people clicked through on links you shared?
- Post timing success: What times of the day did your posts get the most engagements?
- Response time: How fast did you respond to incoming messages on Facebook, Twitter or Instagram?
- Traffic from your website or newsletters: How many people came to your social media via your other marketing efforts?
- Traffic to your website: How much traffic did you drive to your website from your social media?
Review, Recommendation and Referral KPIs
Especially in crowded markets, it can be difficult to differentiate yourself from the competition. One way to stand out is through excellent reviews or recommendations made by happy previous or current customers and clients. Google, TrustPilot and LinkedIn are just three of many third-party platforms for collecting and sharing reviews and recommendations.
Number of reviews: How many total reviews or recommendations do you have, especially for the past week month or year?
Average rating: What’s the overall average rating among all reviews?
I have all these KPIs … so now what?
No matter how many KPIs you collect or how much time you spend gathering them, they are of no use if you don’t take the time to review them. Business leaders like Jane need to not only make good decisions about which KPIs to track, but they need to do so consistently with an eye toward the trends they may reveal.
One of the biggest challenges of KPIs is the fact that the data you need to analyze is coming from multiple sources. It can be time-consuming to visit each independent data source and view mission-critical KPIs. For that reason, many businesses implement a business intelligence, or BI, platform that integrates data from multiple sources and then presents the data in visually meaningful ways. Some of these platforms include Klipfolio, Easy Insight, ClicData, Domo, and Tableau. Most of these services offer cloud-based solutions, which is nice because you don’t have to install or maintain software. Costs can be quite variable, so you should shop around and compare services based on monthly cost, number of seats, number of reports and number of dashboards that your team can run. You should also make sure that the BI platform you evaluate has the right connectors for the various marketing and financial tools you use. For example, a particular platform might connect to Quickbooks but not to FreshBooks.
Sharing KPIs among all key members of the team means that both you and Jane are more likely to get more, different perspectives on them. For example, your Director of Communications might see something in the KPIs that your Marketing Manager does not or vice versa. Together, you’ll all make better decisions going forward.